Risk management

Risk management

Hate it or love it , at some point you will lose a trade.
Fortunately there are a number of things you can do to anticipate risk. For
starters never risk more 3% of your account on a single trade and I repeat
never do that. At the end of this article I will show you how to calculate the
lot size you are supposed to open with varying conditions. Protect your
position with STOPS, LIMITS and ORDER TYPES. There are a lot of order types
such as trailing stops etc.

Set Proper levels such that your trade handle huge jumps or
changes in price which in turn helps you protect you from losing your shirt
when the market goes sideways. A stop that is too narrow may lead you to
re-enter the market causing it to get stopped again.

Check your emotions too. Stay calm because this gives you
the edge over other traders. Resist revenge trades just because you have lost
before.

Create a trading plan and stick to it like your religion. A
good trading plan is crucial to your success as it defines your trade, what you
are willing to risk and how to look out for yourself when lighting strikes. Great
traders always think about how much they can lose before entering a trade.